Options Trading News

Buyers have been jumping on YRC Worldwide this month, and they have cleaned up so far.

optionMONSTER's Heat Seeker monitoring program detected buying in the April 12.50 calls earlier this month for about $2.50. The trucker was under $11 at the time and preparing to face a union vote that would let it escape from under a daunting mountain of pension liabilities.

The stock exploded higher today after creditors agreed to cut $300 million of debt in return for receiving shares, and those April calls have more than tripled to almost $8. YRCW is surging another 25.32 percent this afternoon to $18.76.

The option activity continues today as well. This time, Heat Seeker shows the purchase of almost 3,700 January 20 calls for $1.80 to $2 against open interest of 1,647 contracts. These long calls allow traders to position for a rally with limited risk at prices much lower than the share price, potentially providing significant leverage. (See our Education section)

YRCW was also cited on our proprietary Market Action webinar last week as a turnaround play in an industry that's already benefited from the strong economy. (Others such as Con-Way and Arkansas Best rallied after bullish activity in October.)

The company's 26,000 Teamsters will now vote by Jan. 8 on whether to extend their contract through 2019 while lowering salaries. The move is part of its broader restructuring.

Overall option volume is more than quadruple the daily average in YRCW so far today, according to the Heat Seeker. Calls account for a bullish three-quarters of the total.

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

optionMONSTER® provides stock market insight, advanced options education, and actionable trade ideas to meet the needs of do-it-yourself investors. After spending decades in the trading pits of Chicago, Jon 'DRJ' and Pete Najarian founded the company in 2005 to help people better manage their own investment portfolios.